London Councils Total Place – towards a new service model for Londoners January 2010

## Contents

| Section | Page | |------------------------------------------------------------------------|------| | Introduction | 3 | | Background to this project | 3 | | Total Place – London Councils’ contribution | 3 | | Total Place – a new way of working? | 3 | | Methodology | 5 | | How the mapping was done | 5 | | How the service themes were chosen | 6 | | How the strands were brought together | 6 | | Public expenditure in London | 7 | | Mapping expenditure in London | 7 | | Managing chronic care | 13 | | Introduction | 13 | | What is the problem and why is this a particular issue for London? | 13 | | The current system and its flaws | 15 | | A proposed new system and why this is better | 17 | | Conclusion | 20 | | A whole systems approach to young people exhibiting anti-social behaviour | 21 | | Introduction | 21 | | What is the problem and why is it a particular issue for London? | 21 | | The current system and its flaws | 25 | | A proposed new system and why this is better | 26 | | Conclusion | 29 | | Tackling obstacles to employment | 30 | | Introduction | 30 | | What is the problem and why is this a particular issue for London? | 30 | | The current system and its flaws | 33 | | A proposed new system and why this is better | 34 | | Conclusion | 39 | | Overarching analysis and making the case for change | 40 | | Introduction | 40 | | Extrapolation of findings and potential savings | 44 | | Annex: Non-departmental public bodies operating in London | 45 | Introduction

Background to this project In September 2009, London Councils appointed PricewaterhouseCoopers (PwC) to help develop thinking on Total Place at a pan-London level.

In this paper, we set out the background to Total Place, both nationally and in London, analyse public expenditure in London using the preferred Total Place categorisation of spending, and outline the work we have undertaken with London Councils on the deeper analysis of three important public service areas. Finally, we draw out relevant conclusions from the three thematic analyses that we believe may help to develop the wider public service landscape in London in the Total Place context and highlight the scale of the potential benefits that could be secured.

Total Place – London Councils’ contribution London Councils aims to make a distinctive and considered contribution to the debate on Total Place in the capital. As a representative, pan-London body, London Councils’ goals in so doing are complementary to those of the Boroughs undertaking Total Place projects. London Councils is in a position to join up important themes that impact on all Londoners and to see the pan-London position on public services. In that sense, London Councils has the unique advantage of being close to, but not part of local government service provision in the capital.

PwC’s commission was to map expenditure for London at the headline level and apply Total Place thinking to three public service themes. The three themes need to be seen as exemplars of a way of working through Total Place at this early stage: they are certainly not the only relevant Total Place ideas for London. They are:

- Managing chronic conditions
- A whole system solution to the impact of anti social young people
- Overcoming obstacles to employment.

In each case, the objectives were to build a case for more effective joint working by the public sector in London on the chosen theme and then to begin a debate on reasonable and practicable alternatives to the present pattern of service provision. We are not presenting these to London Councils as perfectly worked up solutions; instead, we are putting these forward as ideas that need further expert input and public debate. However, in each case, by applying Total Place thinking, it is already possible to see the potential for significant financial savings, service improvements and better outcomes.

Total Place – a new way of working? Total Place is a programme aimed at all localities in England and has its origins in pilot work undertaken in Cumbria under the banners Counting Cumbria and Calling Cumbria. Public sector partners in the county cooperated in a process that produced a map of total public sector expenditure in Cumbria and began the process of exploring together how they could be more effective in spending this resource. The term “Total Place” was adopted for this activity by Sir Michael Bichard in his contribution to the Operational Efficiency Programme (HM Treasury, April 2008). Sir Michael’s first recommendation was:

Roll out Total Place, a programme mapping total public spending in a local area and identifying efficiencies through local public sector collaboration to at least 12 pilot sites with a high level reference group to identify how to increase incentives and eliminate the barriers for joint working and with ministerial sponsorship to ensure that issues raised are addressed swiftly across government.

Government has chosen to launch the programme at 13 pilot sites, two of which (Lewisham and Croydon) are in London.

Total Place is an ambitious and challenging programme that, in bringing together elements of central government and local agencies within a place, aims to:

- Create service transformations that can improve the experience of local residents and deliver better value
- Deliver early efficiencies to validate the work
- Develop a body of knowledge about how more effective cross agency working can deliver cost savings and/or better services for citizens.

The Total Place pilots have undertaken two complementary strands of work: the ‘counting’ process that maps money flowing through the place (from central and local bodies) and the thematic/service focus through “deep dives” that explores links between services and identifies where public money can be spent more effectively, most commonly through service design around the citizen.

Our brief from London Councils was to examine the opportunities across London as a whole, complementing the Total Place work that is being undertaken at an individual London Borough level, whether in the two official pilots (Croydon and Lewisham) or by other councils in London. Methodology

How the mapping was done

London Councils commissioned PwC to map public expenditure in London against: services; spending body, funding sources and demographic group. Because of limitations in the data, we were not able to identify expenditure against demographic groups within the capital with sufficient confidence and so have not included that element of the analysis in this report.

Summarised in this report are the expenditure data showing spending by service area and spending body. The reference year chosen was 2008/09 as the latest from which complete data sets are available. The expenditure has been allocated to service blocks using the United Nations’ classification of functions of government (COFOG) definition of public expenditure categories. This is the system used by HM Treasury (HMT) in their national and regional public sector statistical analyses (PESA) and has been adopted as a common language amongst the Total Place pilots.

COFOG is a taxonomy system that breaks down to at least three layers of detail. At level one (the highest category) the COFOG classifications used in the analysis are:

- Defence
- Economic affairs
- Recreation, culture and religion
- Education
- Health
- Public order and safety
- Social protection
- Housing and community amenities
- General public services
- Environmental protection.

The data in this document are sourced from HMT’s PESA set for 2008/09 and the relevant annual accounts for public bodies. The data were segmented into expenditure by national, non-departmental public bodies (such as government agencies) and local bodies (which include the GLA family and primary care trusts). Unlike in other Total Place pilots, we have not undertaken detailed work on the budget books of local bodies in London. There are more than 40 such bodies and so that task alone would have consumed the resources for this project. How the service themes were chosen

The project was managed by a team from London Councils. A project steering group (with leaders, chief executives and finance directors as members) and a number of officers working at a senior level in local government, helped to choose the themes for in depth analysis. All had an influence on the choice of themes for in depth analysis. It was considered important to choose themes that ranged across a number of public services and partners while also selecting areas where it was clear that the lives of many Londoners could be changed for the better if the services could be improved.

Clearly, the three topics are not the only challenges facing the capital; doubtless some would argue that there are other, more pressing issues that should be considered as part of a Total Place approach to improving outcomes for Londoners. Nonetheless, they provide a helpful starting point for the application of Total Place in London because they:

- Affect large sections of London’s population, either directly or indirectly, and attract large volumes of London’s total public service expenditure
- Require whole-system engagement with vulnerable groups of Londoners who face challenging personal circumstances
- Are areas where the governance, fiscal and delivery landscape is complex and where such whole-system engagement is therefore difficult to achieve.

In summary, these topics exemplify the types of challenges that Total Place was designed to tackle. They provide both a frame of reference and a ‘test bed’ for a genuinely transformational approach to public service management and delivery.

How the strands were brought together

The selection of the themes for further analysis was informed in part by the results of the expenditure mapping exercise. The selected topics sit in some of the higher spending COFOG categories, for example social protection, health and public order and safety, and have the potential to impact upon expenditure in a number of other categories. They also involve interactions between some of the larger institutions that make up the delivery of local public services in London – not only local authorities but also Government departments (such as Department of Health, Department for Work and Pensions and Ministry of Justice) as well as a number of the key NDPBs such as Jobcentre Plus and the Youth Justice Board.

In addition, we were seeking to identify any common themes that could have wider application in developing Total Place solutions to London’s challenges. Examples of these include:

- The potential benefits – in fiscal and outcome terms – of early intervention and a preventative approach
- Testing the importance of effective and more integrated case management in reshaping the local state around the needs of its citizens
- Achieving an appropriate balance between central control where it is needed, and devolution to either the local state or the individual where it makes sense
- The possible need to reshape the role of public service professionals to support Total Place approaches to solving London’s pressing social challenges.

Within the three themes that we studied, we have postulated savings in total of around £1.5bn each year. By applying both the general principles set out above and the learning from the thematic studies, we have suggested that the potential benefits of Total Place approaches that could accrue to the public purse in the capital could be as much as 15% of the £73.6bn total spend per annum: or some £11bn each year. Public expenditure in London

Mapping expenditure in London

London is like no other city in the UK – and arguably, it is like few other cities in the world. So in mapping public sector expenditure in London, it is important to acknowledge that London contains the infrastructure of a world city and much of the architecture of the government of the UK. London has many major transport hubs and much of the national infrastructure. It also has a governance structure unlike any other UK city with the office of the Mayor, the Greater London Authority (GLA), many non departmental public bodies (NDPBs) and the London-wide bodies set up by the boroughs. Even within the South East region and sub regions, London predominates more than any of the other regional capitals in England. London’s social and economic influence extends wider and more deeply than any other UK city across a large swathe of England.

For the calculation of London’s share of national expenditure, we have relied on the PESA data which do not disaggregate local (and in London’s case, pan London-controlled) expenditure into the more detailed sub-categories – that is, the information is not available below the top level COFOG headings. So while the expenditure mapping methodology we have used is largely comparable with our other Total Place projects, the results of the mapping need to be seen in London’s particular context.

The headline results

Total public expenditure in London in 2008/09 was £73.6bn. This amounts to around £10,000 for each London resident.

London’s complex travel-to-work pattern makes this hard to compare to other places as many services and assets - for example the transport system or the police - are heavily used by people who work in London but live elsewhere.

The figure below shows that collective expenditure by local bodies(^1) accounted for 58% of the total followed by national departmental expenditure (34%) and NDPBs (8%). London has a more substantial extent of local control (both at the London-wide and borough levels) than other parts of the country due to the additional extent of London-wide government, especially in areas such as transport and economic development.

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(^1) “Local bodies” in this report include London Boroughs, London-level government, the PCTs and NHS Trusts. “Locally accountable bodies” refers to elected bodies As shown in the figure below, the largest areas of aggregate (national, NDPB and local) expenditure are social protection (£25bn), health (£15bn) and education (£12bn). This reinforces the expectation that much public sector activity is based around meeting the needs of individuals, many of whom are in difficult circumstances. This is similar to the distribution seen across the country, although we would expect some small differences given London’s younger population and smaller geographical area.

The largest share of expenditure (about two-thirds) is dedicated to meeting the needs of individuals and communities. Any move to increase public sector efficiency and effectiveness significantly will need to consider these areas carefully. Activities that lessen the need for state intervention – especially in social protection and health – while at the same time maintaining positive individual and societal outcomes, must be key opportunities to focus upon for potential savings; as these are where the money is spent and where it is possible to limit any potential adverse impact on individual and community outcomes.

The table below shows that when the global total is broken down by central government, NDPBs and local bodies, the split of expenditure in London by COFOG category was: National departmental expenditure

Government departments spend over £25bn a year on behalf of Londoners. This is dominated by expenditure which goes directly to meet individual needs as national entitlements, for example, pensions.

| £ millions | National | NDPBs | Local | Total | % | |------------|----------|-------|-------|-------|---| | Social protection | £15,510 | £350 | £9,050 | £24,900 | 34% | | Health | £1,700 | £280 | £13,500 | £15,440 | 21% | | Education | £2,380 | £2,580 | £7,550 | £12,450 | 17% | | Economic affairs | £2,380 | £770 | £4,520 | £7,670 | 10% | | Public order and safety | £2,160 | £300 | £3,930 | £6,390 | 9% | | Housing and community amenities | £120 | £1,190 | £1,840 | £3,150 | 4% | | General public services | £250 | £50 | £980 | £1,280 | 2% | | Recreation, culture and religion | £430 | £40 | £710 | £1,170 | 2% | | Environment protection | £210 | £80 | £870 | £1,160 | 2% | | Defence | £5 | £0 | £10 | £15 | 0% | | Total | £25,100 | £5,600 | £42,900 | £73,600 | 100% |

Over 60% of national departmental expenditure in London is accounted for by £15.6bn of social protection spending which largely comprises state pensions (£6bn), family and income support (£5bn) and disability support (£2.5bn).

Economic affairs account for £2.4bn in expenditure with the largest components in transport (especially the rail network) and support for employment and economic development programmes. Education accounts for expenditure of £2.4bn which is largely routed to tertiary education and non-compulsory education (PESA considers schools funding to be local, not national expenditure). Public order and safety is largely accounted for by the law courts and prison services as policing and fire are locally-controlled activities.

Centralised health expenditure of £1.7bn consists largely of national management of the NHS and support services for local health professionals and institutions.

The next table shows that fourteen government departments are each estimated to spend more than £100m in London. The largest two departments – DWP and the Chancellor’s Departments (HM Treasury and HM Revenue and Customs) – are largely accounted for by social services payments. | Department | £m | Share | |------------------------------------------------|------|-------| | 1 Work and Pensions | £11,200 | 43% | | 2 Chancellor's Departments (HMT and HMRC) | £2,800 | 11% | | 3 Health | £2,700 | 10% | | 4 Children, Schools and Families | £2,100 | 8% | | 5 Transport | £2,100 | 8% | | 6 Innovation, Universities and Skills | £1,500 | 6% | | 7 Home Office | £940 | 4% | | 8 Justice | £920 | 4% | | 9 Communities and Local Government | £510 | 2% | | 10 Culture, Media and Sport | £450 | 2% | | 11 Defence | £290 | 1% | | 12 Environment, Food and Rural Affairs | £240 | 1% | | 13 Energy and Climate Change | £140 | 0.5% | | 14 Business, Enterprise and Regulatory Reform | £120 | 0.5% |

While most expenditure is in departments’ traditional areas (such as the spending of the Department of Health on health), there is also significant expenditure outside these areas based on national shares of departmental spending by COFOG category. As an example, the Ministry of Defence spends approximately £300m annually in London on military and civil services pensions which count as social protection not defence expenditure.

**The expenditure of non-departmental public bodies**

We have identified 156 NDPBs that spend more than £100,000 and have an influence in London. They are listed in the annex to this paper. NDPBs spent £5.6bn on London and Londoners in 2008/09. The largest area of expenditure is education which accounts for just under half of all expenditure, largely focussed on further and higher education. The table below shows the fifteen largest NDPBs by expenditure. As can be seen, these are dominated by two large education bodies (HEFCE and LSC) and the combined housing funders.

| NDPB | £m | |----------------------------------------------------------------------|------| | 1 Higher Education Funding Council for England | £1,083 | | 2 Learning and Skills Council | £875 | | 3 Home and Communities Agency | £693 | | 4 Housing Corporation | £439 | | 5 Legal Services Commission | £275 | | 6 Office for Fair Access | £250 | | 7 Jobcentre Plus | £171 | | 8 Big Lottery Fund | £171 | | 9 Medical Research Council | £161 | | 10 Engineering and Physical Sciences Research Council | £118 | | 11 Teachers Training Agency | £116 | | 12 Science and Technology Facilities Council | £93 | | 13 National Policing Improvement Agency | £86 | | 14 Youth Justice Board for England and Wales | £74 | | 15 Arts Council England | £66 |

These fifteen bodies together account for 83% of NDPB expenditure in London. However, expenditure does not necessarily equate directly to policy influence as some of the large spending bodies are driven by funding formulas determined outside of their own control, whereas some of the smaller spending bodies may have significant power over policy direction and delivery (a good example of this being the inspectorates, who have a relatively small operational spend but a large degree of influence.)

Some sense of the crowding of some types of spending bodies in London arises from a comparison of the numbers of bodies spending by the major COFOG classifications. For example:

- Education and Housing and Community Amenities, which, combined, account for 67% of NDPB expenditure in London have only 29 (out of 169) major spending bodies identified in London
- Economic Affairs has the largest number of spending bodies (58) but accounts for only 14% of total NDPB expenditure
- Recreation, Culture & Religion has the second highest proportion of bodies (35) but accounts for less than 1% of total NDPB expenditure in London.

| UN COFOG | Expenditure (£m) | Spend Share | Bodies | |-----------------------------------|------------------|-------------|--------| | Economic affairs | £772 | 14% | 58 | | Recreation, culture and religion | £36 | 1% | 35 | | Education | £2,576 | 46% | 23 | | Health | £276 | 5% | 14 | | Public order and safety | £300 | 5% | 14 |

2 The 2008/09 financial year included activities of both the HCA and the former Housing Corporation Local expenditure

The usual way to derive a picture of local expenditure is to interrogate the budget books of the relevant bodies. We did not do this here given the scale of such a task in the context of the size of this commission. Some of the local expenditure estimates are therefore from different sources and are not directly comparable.

London-based bodies spent £42.9bn on public services. About half of this expenditure was made by bodies operating at the pan-London level or as part of the National Health Service.

The COFOG analysis does not enable the net spending of local government to be identified with any accuracy. Separately, the Chartered Institute of Public Finance and Accountancy (CIPFA) collects details of local government expenditure annually and for 2008/09, the general fund service expenditure of London Boroughs combined was in the order of £15bn. This number excludes some important service areas such as money flowing through housing revenue accounts but includes others such as Housing Benefit expenditure.

London ‘regional’ bodies (Greater London Authority, London Development Agency, Metropolitan Police, London Fire Brigade and Transport for London) accounted for some £7.5bn expenditure in 2008/09. Of this, two-thirds was for the police and one-sixth for transport.

London local health bodies – both Primary Care Trusts and other NHS Trusts – spent some £15bn in 2008/09. While not directly accountable to elected local representatives, their boards are required to reflect the needs of local communities.

Health expenditure accounts for 31% of local expenditure mostly through NHS Trusts (both foundation trusts and PCTs). Local social protection expenditure accounts for 21% of local expenditure and is a combination of social services and some locally-controlled transfers such as housing benefit. Education is largely for primary and secondary education which is controlled at the borough level. Economic affairs include transportation which is a major share of the funding of Transport for London. Public order and safety is largely spent on the Metropolitan Police with the London Fire Brigade also included. Managing chronic care

Introduction

As average life expectancy extends, more and more people are affected by chronic conditions, both in the developing and developed regions of the world. In 2005, chronic conditions caused approximately 35 million deaths worldwide and this number is expected to increase by almost a fifth in the next decade. When compared with the global pattern, the chronic disease impact upon populations in the western world is disproportionately borne by older people, rather than the economically active. This holds true both in England as a whole and in London in particular.

This topic was chosen as an area for deeper examination because:

- It represents a significant proportion of the total of £74bn of public expenditure each year and encompasses some of the biggest service providers in London
- A significant proportion of that public expenditure is borne by local government, but in a system that is characterised by considerable interdependence between providers
- The problem of chronic care is escalating significantly and, if not addressed more effectively, will present further challenges to London’s public services in the future.

What is the problem and why is this a particular issue for London?

Chronic conditions, as defined by the Department of Health are “diseases which current medical interventions can only control not cure”. The life of a person with a chronic condition is forever altered – there is no return to normal.” Some of the more common chronic conditions are diabetes mellitus; chronic obstructive pulmonary disease (COPD); asthma; arthritis; epilepsy and mental ill health.

In England, more than 15 million people have chronic conditions, with a quarter of these reporting two or more conditions. Prevalence varies suggesting that there are a number of factors driving the variations, including age, lifestyle and so on (ibid). However, age is the most significant driver of chronic conditions in the UK (ibid).

Prevalence of chronic conditions in England 2006/07 (Quality and Outcomes data, DH)

| Condition | Numbers affected | |-----------------------------------------------|------------------| | Coronary heart disease | 1,899,000 | | Heart failure | 420,000 | | Stroke and transient ischemic attack | 863,000 | | Hypertension | 6,706,000 | | Diabetes | 1,962,000 |

3 WHO: An estimate of the economic impact of chronic non communicable diseases in selected countries, Abegunde, D and Stanciole A 4 Raising the profile of long term conditions: A compendium of information, Department of Health 2004 | Chronic obstructive pulmonary disease | 766,000 | |--------------------------------------|---------| | Epilepsy | 321,000 | | Cancer | 489,000 | | Severe mental health conditions | 380,000 | | Asthma | 3,100,000 |

With declining birth rates and the increases in life expectancy that come from advances in medicine and medical technology, chronic conditions are more likely to affect the populations of Northern Europe. There are a significant number of people over the age of 40 who report having multiple long term chronic health conditions. The trends for an ageing population are likely to increase the pressures in terms of people with chronic conditions. By 2025, there will be 16% more people aged 40 and over in England and 42% aged 65 and over. Based on these trends, the number of people in the national population with at least one chronic condition could rise to 18 million by 2025. People who have chronic conditions are high users of social care and community services.

Although the demand for long term care is not synonymous with chronic care, the two are hard to separate: public expenditure on long term care is estimated to reach almost £16 billion and total long term care expenditure is projected to reach approximately 1.8% of gross domestic product by 2022.

**The Government’s objectives in relation to chronic health conditions**

Joining up health and social care is on the national and local agenda. The Government is looking to achieve the following outcomes across health and social care:

- Better health and well-being for all – helping people to stay healthy and well, empowering people to live independently and tackle health inequalities
- Better care for all – the best possible health and social care, offering safe and effective services, when and where people need help, and empowering people to make choices
- Better value for all – delivering affordable, efficient and sustainable services, contributing to the wider economy and the nation

The following indicator has been set to measure improvements as part of the National Quality and Outcomes Framework (NHS 2008/09):

**For people with chronic conditions, improving their satisfaction with the support they are given to be independent and in control of their condition and reducing the number of emergency bed days**

**Chronic conditions in London**

There are at least 3.5 million Londoners with some degree of chronic condition, (some of these will be mild or early stage – for example, musculo-skeletal problems) with 1.3 million registered NHS cases of

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5 60% of UK adults report having at least one chronic condition (Department of Health 2004), and 26% report have three or more chronic conditions (British Household Panel 2001)

6 ONS population projections 2006-2031

7 Based on ONS projected population aged over 40 of 29.5 million and a 60% rate of chronic conditions among adults (DH 2004)

8 Long-term care expenditure for older people, projections to 2022 for Great Britain PSSRU 2005

9 See DH Our Health, Our Care, Our Say Jan 2006 or Shaping the Future of Care Together July 2009 the major chronic conditions. Approximately 900,000 people have more than three chronic conditions and more than half of GP visits in London; 65% of outpatient appointments; and 72% of all hospital bed days are associated with chronic conditions in some way.\\textsuperscript{11}

People with chronic conditions are twice as likely to have mental health problems, three times as likely to suffer from depression and have an increased likelihood of suicide.\\textsuperscript{12} Chronic conditions place a significant limit on the potential for employment. Chronic conditions also affect both the nature and amount of work undertaken. Households that include someone with a chronic condition are more likely to have lower incomes. In 2007/08, the cost of DWP benefits payments in London directly associated with chronic conditions, (that is: Attendance Allowance; Carer’s Allowance; Disability Living Allowance; Incapacity Benefit/Severe Disablement Allowance) was £2.1bn being 14% of all benefit expenditure (DWP statistics service).

Our research suggests that expenditure on chronic care in London is at least £5bn pa (approximately 7% or more of total annual public expenditure in the capital), with primary care trusts spending at least £3bn per annum on chronic conditions across all care settings. We have estimated that social services expenditure in London related to chronic conditions and needs is at least £2bn pa as set out in the table (that is approximately 13% of the estimated £16bn total expenditure in 2008/09 by London Boroughs.) The category “other adult services” includes expenditure on substance misuse and vulnerable people.

### Estimate of social care costs of chronic conditions to London Boroughs

(NHS Personal Social Services Expenditure and Unit Costs data set)

| Completed Assessments | Provision of residential care (people-years) | Net total expenditure (£m) | |-----------------------|---------------------------------------------|---------------------------| | Older people (65+) | 53,550 | 19,437 | 1,105 | | Adults under 65 with Physical disability | 12,560 | 1,409 | 261 | | Adults under 65 with learning disability | 1,575 | 5,715 | 564 | | Adults under 65 with mental health needs | 15,145 | 2,649 | 271 | | Asylum seekers | | | 9 | | Other adult services | 5,295 | | 85 | | **TOTAL** | | | **1,955** |

Thus, the burden of chronic disease in London is a serious one. It affects the quality of life of Londoners; causes premature death and disability and creates large and underappreciated economic effects on individuals, families, across communities and for London as a whole.

### The current system and its flaws

There are many flaws in the current systems for treating chronic conditions which lead to increased costs and lower satisfaction. These can be summarised as follows:

#### Organisation of the model of care

Despite many attempts to re-orientate the service model, service provision in health has continued to focus on the acute hospital and the acute episode of care rather than the systematic prevention of those at risk from entering the acute system. To deliver more appropriate care to people with chronic conditions

\\textsuperscript{11} Extrapolated from DH UK figures 2004

\\textsuperscript{12} Raising the profile of long term conditions: A compendium of information, Department of Health 2004 will require a step change in approach to focus on prevention and timely intervention. The position in social care is a little different with more progressive local authorities making large strides towards earlier intervention and more self directed care; other councils still have some way to go on this.

Organisational boundaries cause fragmentation of services and support, with inherent delays and inefficiencies in service delivery. Better collaboration – even integration – has yielded some excellent results in individual localities, but, despite some first-rate local initiatives, the joint model of care in London requires a ‘step change’ in approach and delivery to avoid a system where the care is only offered to people with chronic conditions when their needs are most acute.

**Customer expectations**

The public, carers and service providers are not routinely involved in service design or configuration. Most people living with chronic conditions would like more say in where and how their care is provided and how services to support their independence and well-being are configured.

Many people who have long term conditions also want access to information about their conditions so that they are empowered to manage them better. The more likely they are to want to take care of their own health, the more likely they are to want to work and to feel more socially included.

**Financing the system**

Different political parties will postulate different spending positions, but the fiscal and economic outlook for spending on health and social care is poor in the short to medium term, whichever party forms the next government. Reduced spending will impact on individuals, families and communities and is likely to mean more means testing, co-funding and further reliance on the role of individuals, families and carers in dealing with complex health and social care issues.

Funding streams do not easily support the multi-agency working that can deliver the best possible outcomes for the public. Not only does this lead to conflicts in governance and duplication of effort, but can conflict with the objective of providing value for money. Thus it is difficult to determine whether initiatives are delivering good value for taxpayers and individuals as reporting is done by organisation (top down) rather than by individual, family or community (bottom up).

Individual budgets across health and social care are accepted as a positive initiative but are not routinely used as a means to empower individuals, improve efficiency and gain better user satisfaction. Information is not easily shared between agencies and this is a significant barrier to adopting a citizen-centred approach to health and social care.

**Design principles for a future delivery model**

Research internationally and in the UK has identified four requirements that underlie the prevention and alleviation of chronic conditions. These should influence any new model of care.

- **Self management of chronic conditions in the context of promoting healthy lifestyles**

  Investment in prevention and resources to encourage healthy lifestyles continues to be a challenge for the NHS and local authorities. Whilst the Comprehensive Area Assessment is driving closer collaboration, more work is required for these partnerships to mature.

  Inequalities in health outcomes persist and the social determinants of health need to be addressed in a systematic manner.

- **Prevent unnecessary deaths and disabilities arising from chronic conditions**

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13 See SCIE Research Briefing 20: The implementation of individual budget schemes in adult social care

14 Improving Care for People with Long term conditions: HSMC University of Birmingham and NHS Institute for Innovation and Improvement

15 Post 2010 Strategic review of health inequalities – The Marmot Review DH 2009 Personalised care planning and the provision of useful and relevant guidance and information are essential for self care and management as this will prevent future complications.

- **Treat chronic conditions effectively and in the most appropriate care setting**

Individual case management and a whole system approach with citizens at the centre can ensure that the right care is delivered in the right place at the right time. Effective treatment is most often early treatment, with the appropriate supporting infrastructure, for example, access to diagnostics.

- **Provide appropriate and tailored care and support for those living with long term conditions**

Self care and self management should be the goal of all people living with chronic conditions. Service providers should be encouraged to support individuals to achieve this, no matter how difficult the organisational boundaries.

**A proposed new system and why this is better**

Our recent work with national and international social care organisations has emphasised the importance of early intervention and self directed care. We explore in this section whether such learning specifically applied to people with chronic conditions could offer a significant improvement on current care pathways, especially in the provision of appropriate healthcare.

The new model is predicated on a number of reforms to the current system including: a shift in resource commitment on the part of the NHS to earlier intervention across the system; a greater emphasis on self-directed care; a common service pathway and a common system of case management.

The graphic overleaf sets out three health and social care pathways for people with chronic conditions. **The first box** “Current health and social care model” outlines the way in which most people access health and/or social care at present – often too late, and under the guidance of professional social workers. While there is user involvement, too much of the care on offer comes in predetermined packages.

**The second box** “Emerging model of social care” represents the way in which a number of leading local authorities (in London and elsewhere) are developing the Adult social care agenda: and is in tune with *Shaping the Future of Care Together* (the adult social care green paper 2009 – DH). It shows a greater level of self determination – some “de-professionalization” of early care interventions and concentrates the self-directed care at prevention and/or re-enablement.

**The third box** shows the most recent thinking and takes the principles of self-directed health and social care to a pathway for chronic care by describing an emerging model of integrated health and social care. This model:

- Places the citizen at the heart of service design and the planning of appropriate care and medical intervention
- Articulates the need for investment in prevention rather than cost at the point of acuity or service contact but does not quantify it in economic terms
- Promotes early re-enablement support as being key to ensuring care is provided in the right setting by facilitating independence.
- Recognises that service users may require services and care packages that are bespoke to their particular needs.

There are many innovative aspects to the new care pathway model but at its core is the recognition that a greater level of self directed care should be a genuine three-way endeavour between the citizen, local government and the NHS. The key to putting such a change in place would be to commit significant NHS resource to help fund the preventative care package. To put this in a way that ordinary service users might understand, *it needs the NHS to spend health money on you when you’re not acutely ill.* Crystallising and bringing forward acute health spending is not the only feature of the model. A greater level of self-direction in care is also judged to be a social and economic good of itself: and the model works best when the care assessment process is a common one between health and social care. That is, a single caseworker helping citizens to access what to date has been care in two different systems.

A proposed new model of health care for people with chronic conditions set alongside old and new models of social care

Applying this new model to the treatment of people with diabetes

Type two diabetes is one of the most intractable chronic conditions with an increasing prevalence due both to lifestyle factors and an ageing population. According to the London Health Observatory, there are around 320,000 registered diabetics in London (reference year 2005/06). However, early intervention in lifestyle behaviours and good care and management of the condition can significantly improve people’s lives. It is a formal objective of the NHS in London to work to prevent people with diabetes presenting in an acute setting.16

We therefore consider the treatment of people with diabetes to be a good exemplar to use in order to explore the way in which a new service model consistent with the principles of the care model described above might work. Particularly whether it could change outcomes, deliver public satisfaction and secure better value for money services.

There is relatively little information available on the detailed costs of care for Londoners with diabetes. So what follows is a set of broad assumptions that we made for the purposes of modelling new outcomes. While the cohorts we describe below probably mirror the reality of life for people with diabetes, we do not claim an absolute triangulation with objective London-wide information on costs of care or care outcomes. For the purposes of testing a new model of care, we made assumptions about the characteristics of the population of Londoners with diabetes and allocated them into four notional cohorts:

**Cohort one:** are the 90% of patients who generally self-manage and require relatively little extra supervision and care management, though they have annual ‘upkeep’ cost for drugs and extra GPs visits

**Cohort two:** 2.5% of patients do not self-manage and require emergency admissions

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16 NHS Healthcare for London Programme Cohort three: 5% of patients need additional assistance to in order self-manage, but who would like to manage their own conditions more effectively

Cohort four: 2.5% of patients have co-morbidities with conditions such as mental health disorders.

Indicative costs allocated to each cohort

To model new outcomes, we derived assumptions about the direct current costs of care. Again, these assumptions are based on real life experiences, but are necessarily indicative at this stage. For cohort one, we have allocated drugs and GPs’ costs; for the remaining cohorts, we have allocated different mixes of emergency admissions (between two and four per year), home care services (three times per week), meals on wheels (five times per week) and funded nursing care (three times per week). Aggregated up, the costs of these interventions are in the table below.

Based on these assumptions, the annual costs of managing diabetes in London would represent approximately 11% of the annual chronic care expenditure. This is approximately £590m of the £5bn annual expenditure that we identified earlier. Significantly, these costs are for the relevant health and social care services: we have made no wider assumptions about the cost benefit to London’s economy or community of better diabetes care. The direct costs are summarised in the table below.

| Patients | NHS Costs (£m) | Local Authority Costs (£m) | Total Costs (£m) | |----------|----------------|-----------------------------|------------------| | Cohort 1 | 256,462 | 18.2 | 18.2 | | Cohort 1 | 8,014 | 63.9 | 90.9 | | Cohort 1 | 16,029 | 95.7 | 181.9 | | Cohort 1 | 8,014 | 47.9 | 90.9 | | TOTAL | 320,577 | 225.7 | 363.8 |

Managing chronic care – the potential savings around diabetes

We then modelled some interventions which reduce the assumed needs of the cohorts for health and care based on the principles of the new care pathway above. For example, we assume that:

- With earlier intervention and better case management, half of the cohort two patients have only two emergency admissions per year and after six months, their home care packages reduce to once a week
- Half the cohort four patients have no emergency admissions and gradually reduce their needs for home care services
- Half of the cohort three patients are helped to realise their ambition to manage their condition more effectively.

The new costs of provision and savings associated with the new model are in the table below.

| | NHS Costs (£m) | Local Authority Costs (£m) | Total Costs (£m) | |------------------|----------------|-----------------------------|------------------| | New costs | 203.9 | 281.6 | 485.6 | | Savings | 21.7 | 82.2 | 103.9 |

We suggest savings of more than £100mn are achievable on the modelled expenditure for diabetes care; a reduction of almost 20% of the total assumed cost. And as a reminder, neither the costs nor the savings encompass wider benefits of better care. These savings accrue principally as a consequence of people being treated in the most appropriate care setting, and more particularly, of being treated before conditions become so acute that emergency health intervention is needed. Can we extrapolate these benefits across other chronic conditions?

The primary purpose of this document is to make the case for change – not to work up a finely tuned solution. But organisations around London – for example, NHS Barnet on vascular disease; Lewisham Council and NHS Lewisham on whole systems commissioning; and Well London on healthy eating and living – have all made progress in this field by adopting a model loosely based on:

- Emphasising prevention or early intervention
- Jointly building the systems around the customer/patient
- Boosting the level of self-direction in care.

Postulating the wider potential benefits of change is complicated. The American Diabetes Association estimates that around 10% of the USA’s wider healthcare costs are attributable to diabetes. In this paper, we have suggested that this cost in London is around £590m - which is just over 11% of the £5bn we identified as the cost of chronic conditions to health and local government as a whole. So these estimates of the proportion of expenditure are broadly in line. We suggest savings of more than £100mn on the assumed direct expenditure on diabetes: a saving of just under 18%.

Our examination of the benefits of the new model of care for the treatment of diabetes is also relevant to the treatment of other chronic health conditions. It is therefore reasonable to assume that a similar level of savings could be secured through reform to the treatment of these other conditions. If comparable reductions in expenditure could be made by applying similar models of care across all chronic conditions, we estimate that direct savings of £880mn could accrue on the annual direct cost of £5bn. For local government, our assumptions at the broadest level would suggest that savings in the region of 25% or more may be achievable on the costs of chronic care, but these are unlocked by a relative shift in NHS spending towards preventative care/earlier intervention.

While we acknowledge that our suggestions need more work, we would also argue that we have not yet computed any wider savings to the economy and community of London from improving the treatment and care of people with chronic conditions.

Conclusion

We believe that a package of reform based primarily on policy realignment around earlier intervention could enhance outcomes for Londoners and result in savings of about £880mn out of the total £5bn currently spent on treating and caring for people with chronic health conditions. This package of reform is not dependent upon structural reorganisation within the capital’s public services. Rather, it requires a redirection of resource within the NHS from acute settings to focus more on prevention; a move towards on self-direction and self-service by users; and more effective case management. This presents a set of challenges both to health and social care professionals and organisations, but with a significant potential prize on offer. A whole systems approach to young people exhibiting anti-social behaviour

Introduction

Compared to other areas of criminal behaviour, anti-social behaviour (ASB) by young people is not a particularly well researched area. It has only been a focus of Government action in the past decade or so and there is limited statistical information available about it on a national or regional basis. Data on volume and impact of the problem are not collected through official channels because most forms of ASB are not classified as crimes. The evidence base is focused on public perceptions rather than empirical research. Data on costs (to the public sector and to society) are also highly patchy and at a high level.

This area was chosen for deeper examination because, although the direct costs associated with the issue are relatively small when compared to the two other themes we have studied, it is characterised by complexity in administration and the involvement of a large number of public sector bodies. It is also an area where, as this section highlights, significant “lifetime” costs associated with truancy and broader criminality are incurred by the public sector as a result of a failure to intervene sooner and more effectively.

Given the nature of the data, it is not possible to present with accuracy detailed, costed recommendations for the future. Rather, we suggest a number of areas where we believe improvements to the current, highly fragmented delivery model might be made, which London Councils may wish to explore further with key partners in this sector. We believe these improvements present opportunities for efficiency gains and have the potential for producing better outcomes for Londoners, with significant financial benefits in the longer term as a consequence.

What is the problem and why is it a particular issue for London?

Definitions

Anti-social behaviour (ASB) is defined by the Home Office as “any aggressive, intimidating or destructive activity that damages or destroys another person’s quality of life”. By definition, ASB is not criminal behaviour (ASB interventions such as ASBOs are civil not criminal penalties), but can have a similarly adverse impact on the communities and individuals affected by it.

The Home Office has developed a typology of anti-social behaviours(^\\text{17}) which highlights the following:

- Drug/substance misuse and dealing
- Begging
- Kerb crawling
- Abandoned cars
- Street drinking
- Prostitution
- Sexual acts
- Noise

(^{17}) Defining and measuring anti-social behaviour: Home Office 2004

- Rowdy behaviour
- Hoax calls
- Intimidation/harassment
- Vehicle-related nuisance/inappropriate vehicle use
- Nuisance behaviour
- Animal-related problems
- Criminal damage/vandalism
- Litter/rubbish

The size of the problem – numbers and cost to public services

The focus of this analysis is upon youth-associated ASB but it is important to note that young people do not have the monopoly on ASB. Much is committed by adults, concerns environmental problems, or is related to general rudeness by people of all ages. But it is not unreasonable to say that a significant proportion of the responsibility for perceived ASB is placed at the door of young people. As the chart below from the current British Crime Survey shows, most people in the UK think that ‘teenagers hanging around’ is the number one ASB issue for them.

Perceptions of anti-social behaviour by strand, 2001/02 to 2008/08

Source: British Crime Survey 2008/09

Estimating the number of young people exhibiting ASB in London is not straightforward. It would take a great deal of new, primary research to do so with any notable degree of precision. However, we have produced some indicative figures for the purposes of this project, based on extrapolations of national data sets.

2006 Home Office research suggests that every year, between 200,000 and 300,000 young people across London commit criminal and/or anti social behaviour within their communities. Most of these actions are relatively small scale and involve a limited number of incidents; they will be towards the ASB end of the continuum, rather than the criminal end. We judge that an extrapolation from national evidence on anti-social behaviour allows us to estimate that approximately 180,000 London young people commit anti-social behaviour every year.

Proportionally, London has fewer youth offenders than the North West, South East, West Midlands and Yorkshire regions based on official sanctions, but given the city’s size and transport links there is a perception that ASB and youth crime can occur anywhere in the city. The table below(^\\text{18}) shows that the overall perception of ASB is no higher in London than it is in Birmingham or Manchester. However, it is

(^{18}) Home Office Anti-Social Behaviour Action website noticeably higher than the London average in East Inner London and the outer areas surrounding it and lower in the more secure areas in the West and the South.

| Area | Percentage | |-------------------------------------------|------------| | West Inner London | 20.8% | | East Inner London | 33.8% | | East and North East Outer London | 28.9% | | South Outer London | 20.9% | | West and North West Outer London | 24.4% | | London | 26.7% | | Greater Manchester | 27.0% | | West Midlands | 27.4% |

Home Office research into the impact of anti-social behaviour highlights the degree of activity and its costs to the public service. Based on an analysis of a single day’s activities across England, the research calculates that ASB costs the public sector £13.5mn per day, or £3.4bn each year. The largest areas of costs are criminal damage/vandalism, intimidation/harassment, litter/rubbish, nuisance behaviour and vehicle-related nuisance.

| Category | Count | Est Cost per Day | Est Annual Costs | |-----------------------------------------------|-------|------------------|------------------| | LITTER/RUBBISH | 10,086| £1,866,000 | £486m | | CRIMINAL DAMAGE/VANDALISM | 7,855 | £2,667,000 | £687m | | VEHICLE RELATED NUISANCE | 7,782 | £1,361,000 | £340m | | NUISANCE BEHAVIOUR | 7,660 | £1,420,000 | £355m | | INTIMIDATION/HARASSMENT | 5,415 | £1,983,000 | £496m | | NOISE | 5,374 | £994,000 | £249m | | ROWDY BEHAVIOUR | 5,339 | £996,000 | £249m | | ABANDONED VEHICLES | 4,994 | £360,000 | £90m | | STREET DRINKING AND BEGGING | 3,239 | £504,000 | £126m | | DRUG/SUBSTANCE MISUSE AND DRUG DEALING | 2,920 | £527,000 | £132m | | ANIMAL RELATED PROBLEMS | 2,546 | £458,000 | £114m | | HOAX CALLS | 1,286 | £198,000 | £49m | | PROSTITUTION, KERB-CRAWLING, SEXUAL ACTS | 1,011 | £167,000 | £42m | | TOTAL | 66,107| £13,500,000 | £3.375bn |

We have estimated that the proportion of this cost falling to London’s public services in respect of the ASB committed by young people is approximately £500mn per year. Around two-thirds of this cost falls upon local authorities and the remainder to the Metropolitan Police. Much of the expenditure is remedial, for example, dealing with the consequences of evidenced ASB.

These are the direct costs of ASB to the public purse in London. Including the direct costs to private individuals, companies and organisations would increase this significantly. The additional emotional costs of lives restricted by fear and worry would be even higher. This is because ASB more broadly impacts on the living standards and costs of London residents, workers and visitors. It breaks down the social ties and trust which underpin sustainable and prospering communities. Faced with ASB, people feel less comfortable undertaking their day-to-day activities, feel the need to spend money on protecting themselves and their property, and worry about the impact on friends and families.

We have not focused on these broader costs to non-public sector bodies and the immediate wider social impact of ASB in this examination. Instead, we have considered the impact to the public purse of a

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19 Economic and social costs of crime in London – Based on data from Home Office (2005). The economic and social costs of crime against individuals and households and 2008/09 crime data from the Home Office RDS website failure to address ASB effectively. The main result of this failure is that those who show this behaviour during their youth then descend into more serious criminal activity over a prolonged period of time and this has associated (and escalating) costs. We have also examined the potential benefits to other areas of public expenditure in the short term in more successfully addressing ASB by means of earlier interventions.

**ASB and youth offending – the wider costs**

The dividing line between ASB and youth offending is not precisely defined, but there is a substantial body of evidence that demonstrates the links. Most young people exhibiting ASB do so infrequently and without progressing into recognised criminal activity or becoming subject to the criminal justice system. At the same time, it is reasonable to assume that a clear majority of recognised youth offenders have, at some point, exhibited ASB. Therefore for the purposes of this examination, the youth offending population has been regarded as a subset of the broader population of 180,000 young Londoners exhibiting ASB.

The transition to youth offending happens when young people move on to more serious offences involving violence and property crimes. The annual reoffending rate of juveniles is 40% on average, but over 80% for those who have committed more than 10 crimes; who also commit more serious and costly crimes. Therefore, “nipping ASB in the bud” can have a big pay back.

We have focused on the activity of Youth Offending Teams (YOTS) across the capital as a means of assessing the broader costs associated with youth offending. YOTS are designed to bring together the services of police, health, local authorities and others to support their work in reducing youth re-offending and escalation of criminal careers. Currently, some 15,000 young Londoners are on the books of YOTs – in short, approximately 8% of the current population of young people exhibiting ASB can also be considered to be young offenders.

The budgets of YOTS and the cost of youth custody are a direct cost associated with the management of this population of young offenders. The YJB spends £74mn in London on both custody and YOTS. In addition, there are other costs associated with the operation of YOTS and the management of the court service. We estimate that total annual expenditure on dealing with youth offending in the capital is in the order of £150mn.

In total, therefore, our examination of youth ASB is concerned with direct public sector costs annually of approximately £650mn. This is made up of the £500mn of direct costs we estimated from the national costs and some £150mn of YJB, court and others costs.

**Longer term costs**

Our exploration of this theme has also concentrated on other costs that are, in part, attributable to ASB amongst young people. Specifically, we have looked at the links between ASB and truancy, and the impact of ASB on future levels of criminality and the criminal justice system. Our reason for examining these areas is that more effective action in tackling ASB earlier should help to avoid these future, higher levels of expenditure.

There is a substantial body of evidence demonstrating the links between school truancy and youth ASB. Some 11,400 young Londoners are persistent truants with an estimated lifetime cost of £500mn in total. Interestingly, the research cited notes that the impacts on long-term prospects from regular truancy can exceed that for young people who are excluded, as the persistent truants do not receive support to make up the ground that they have lost, whereas excluded young people often get specialised, focused educational provision.

The great majority of young people grow out of ASB, but for a minority it can be the precursor to more serious problems. There is strong evidence linking ASB – especially early on-set (that is children younger than ten) – to future more serious offending which can lead to greater damage to both people

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20 Report of Policy Action Team on ASB – Social Exclusion Unit

21 New Philanthropy Capital (2007) Misspent youth: the costs of truancy and exclusion and property and to further public sector cost. Descent into extensive offending can reduce the life-long opportunities for the young people involved in crime: they can lose out on educational opportunities; find it harder to find employment; damage their personal and familial relationships; and risk spending time in prison.

The more significant public cost therefore arises from the failure of public services to prevent youth ASB from developing into more serious offending. Based on separate research that we have undertaken, we believe that the costs of associated with a “life time” of crime would on average easily run into many hundreds of thousands of pounds per individual.

Unpublished PwC research for the Ministry of Justice suggests that a very large majority of male criminals now in custody started offending at a young age. There are currently around 18,000 adult Londoners in prison and the costs associated with this level of imprisonment amount to approximately £900mn per year. This number highlights the inability of the present systems dealing with ASB and youth offending to prevent London’s youth from progressing to more serious criminal activity.

It is apparent therefore that tackling ASB amongst young people more effectively should lead to significant reductions in the £500mn lifetime costs associated with truancy and the £900mn annual costs associated with the management of London’s imprisoned offenders.

**The current system and its flaws**

The current systems for dealing with ASB and its consequences are complex; as are those for preventing these activities from escalating to more serious criminal activity.

There are multiple, overlapping providers and commissioners of services to address ASB. The activities they carry out fall uncomfortably along the line between services that are under the jurisdiction of the police – with a remit to ensure public safety and to tackle crime -- and under the control of local authorities who have a remit to ensure the liveability of their areas and community cohesion. National agencies such as the Youth Justice Board also play an important role in funding and monitoring YOTs as well as purchasing places in secure units for the most serious child offenders. A lack of clear coordination at the local level leads to patchy provision depending on the priorities of assorted national and local bodies. These objectives can often clash, especially where there are very specific targets that the various bodies are looking to meet. A target to increase the number of incidents which are pursued by the police may well run contrary to a local authority’s desire to limit the number of local young people who are being criminalised at an early age.

The diagram below shows the range of agencies involved in service provision for this group, from preventative work with families to rehabilitation work with older offenders who have entered the adult justice system. Under the current arrangements, there are essentially two types of intervention which are undertaken:

- **Personalised interventions** which focus on specific individuals, families or specific small groups of individuals. These can have a significant impact but are costly as resources can only be focussed on a relatively small number of people at a time. Therefore, the interventions are often focussed on those who already have a significant history of ASB and offending. While these people are more likely to commit greater numbers of future crimes, personalised interventions can do little to prevent people from entering a criminal career. Rather, they minimise the impact once one has begun;

- **Social interventions** which are applied to entire groups or areas: for example, they may involve working with local residents or students in specific schools. Such interventions can lower the overall impact of ASB and youth offending, but it is harder to measure a specific impact from them as the individuals involved are deterred from committing crimes in the first place.

In addition to ASB itself, addressing the wider fall out from truancy and school exclusion is not widely dealt with in a coordinated manner across education, criminal justice and social services, despite some specific individual projects that address the issue.

**A proposed new system and why this is better**

There is certainly greater scope for cooperation across the public sector in providing services that contribute to the prevention of ASB and youth offending by working with young people at risk – and their communities – and to reducing re-offending by working with young offenders. The national policy debate is moving in the direction of incentivising locally-led preventative action with young offenders. This proposition is a key part of the Ministry of Justice’s (MoJ) Transforming Justice programme. Local authorities need to be ready to offer help in those areas where they are best able to support other public sector activities, but also need to ensure that the activities of other public bodies support the work of local authorities.

As we have noted earlier, London’s local authorities end up picking up many of the direct costs and an even greater proportion of the indirect costs of this social problem. At the same time they are the democratic bodies closest to their communities and with the best community knowledge. We therefore propose that councils should have a much stronger role as a unifying organisational link between the other bodies at work in this system and that they be strongly incentivised to intervene much earlier in the cycle of a young person's criminality.

The diagram below highlights the areas where we believe there is a strong case for amending the system.

This proposed new model has the following key features:

**Locally-led intensive support.** Much of the evidence and cost analyses point towards the benefits of earlier interventions to prevent anti-social and criminal behaviour. Local authorities have many of the required tools and information to be in the lead for early interventions but will need to work with other local bodies, such as the health services and schools, to identify and work with families and individuals at risk. This may require co-operation at a pan-London level to share best practice and tackle common issues such as data sharing.

**Aligning the evidence and resources available** can enable an appropriate intervention at a time when it is more appropriate and when families are vulnerable, such as when an older sibling has got into trouble with the police and may be about to serve time in prison.

**Children at risk.** Local authorities need to strengthen their work to identify children showing early signs of ASB and criminal behaviour and ensure that interventions are being joined-up across relevant public bodies. Persistent truancy and the development of behavioural problems and examples of these signs. Steps can then be taken to provide the appropriate support to ensure that their underlying issues are addressed and that the young person does not start to offend and further damage their future potential.

**Control over youth ASB agencies.** We suggest that local authorities should take control of YOTs and ensure that they are fully integrated with the local provision for young people, including education and alcohol/drug treatment teams. Central bodies such as YJB, Home Office and DCFS could give local authorities greater latitude to respond to local issues by providing a series of funding pots and match funding which allow authorities greater flexibility to match resources to the needs and objectives that reflect local circumstances and resonate most with local communities. Offender re-integration. Local authorities can provide an important service to prevent re-offending by older offenders – including those coming back from youth offending sentences – by ensuring that there is a re-integration service available for those that have been serving time in prison. Most offenders will receive minimal re-location support and limited probation time as they are not judged to be at high risk. However, they have a high likelihood to re-offend, especially if they are not able to establish themselves in housing and employment. Working with the prison service and Youth Justice Board, we believe local authorities should take a lead to ensure that these individuals are met by a support worker and helped to obtain the housing, health, educational and other support they need to allow them the chance to become productive citizens. This would have a beneficial impact for the community both in terms of reducing the individual’s likelihood to re-offend (if they do re-offend, it is likely to occur near to where they live) but also by ensuring that the young people and others in their family and community networks are given the right signals about the ability of people to pull away from a criminal career.

The benefits and costs of a reform package This reform proposition focuses on London Boroughs playing a new, or more developed, role in respect of young people exhibiting ASB in their local areas. It suggests that local authorities play a coordinating, end-to-end role, interjecting at key points in the life of young people to help prevent them from developing from ASB to more serious offending behaviour. The focus on prevention will have long term benefits for the public purse by reducing the need for expensive spending on criminal justice interventions. There are numerous examples of local authorities playing this kind of role (Tower Hamlets and Lambeth for example in respect of offender reintegration), but they suffer from short term funding and unclear governance arrangements.

The Government has set itself a target of reducing re-offending (both adult and youth) by 10% over the current spending review period. We believe our package of proposed reforms will help significantly towards the achievement of that target in the future. We further believe that our proposals could reduce youth ASB by a similar amount.

On the assumption that an average criminal “career” spans about ten years, the application of these reforms could therefore also result in reduced direct expenditure associated with youth ASB and offending of approximately £65m of the estimated £650m annual costs. The majority of the savings would flow from the benefits of earlier intervention that would reduce the immediate incidence of ASB and the consequential costs associated with youth offending. There are also savings within this estimated total to be secured in the administration of the system through the greater clarity and efficiency in the flow and administration of funds, and in the activities of the various bodies. The new model depends on a ‘justice reinvestment’ proposition, that opens up a pool of funding for local authorities and their partners to invest in preventative work on the basis that this will reduce overall spending on palliative interventions across a number of financial years.

We suggest that a ‘kick start’ to a more flexible form of funding that emphasises social investment could be delivered by decentralising a large part of the YJB, DCFS, OCJR and Home Office funding for YOTs to local authorities, removing the costs of multiple administrative functions at the centre. This would be in the region £20m per year.

Changing the funding regime in the current climate will be difficult, but it this sort of ‘justice reinvestment’ idea has been discussed by academics and lobby groups in the sector and is starting to gain traction with Government. Justice Reinvestment makes the case for reallocating funding for expensive correctional services interventions (it costs £250k per year to keep a young person in a secure children’s home) to preventative services over a reasonable time period (the three years of a spending review).

It would therefore be a propitious time for London Councils to engage in this debate because it features strongly in two major reform programmes:

- The Transforming Justice programme, being run by the Ministry of Justice which includes a programme to ‘invest in prevention to reduce youth crime’, including by exploring better ways of ‘incentivising’ local authorities to focus on this area; and

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22 Reinventing Justice, Esmee Fairburn Foundation 2003 • The review of the Youth Justice Board which includes exploration of the feasibility of devolving budgets for custodial services to local government.

Both projects are at the stage of developing strategic business cases which may well help London Councils develop and inform new thinking in this area by providing a local perspective on the topic.

**Conclusion**

There is currently an estimated £650mn spent annually by London public services on dealing with ASB and consequential youth offending. We estimate that our proposed reforms, focused on earlier intervention, simpler administration and an enhanced role for local authorities to “fill the gaps” in current arrangements should reduce overall costs by as much as 10%. They can also deliver better outcomes in the form of reduced occurrence of ASB and lower reoffending rates. This will require some significant investment on the part of London’s public services.

The benefits, however, go much broader than the direct costs highlighted above. By reducing ASB and youth offending, London’s public services will also be tackling the costs associated with high levels of truancy (£500mn lifetime costs) and with early offenders descending into a lifetime of crime (£900mn per annum on Londoners in prison). These are important objectives to pursue. Tackling obstacles to employment

Introduction

London is paradoxically both the engine room of the United Kingdom economy and one of the areas of the country most affected by worklessness. There are around 1.6mn workless Londoners, a figure which not only reflects the recent economic downturn, but also illustrates a longer term challenge that has not been addressed in the period between 1997 and 2007 when the economy was growing strongly.

This service theme has its own distinguishing characteristics and was chosen for deeper analysis because:

- It is an area with a relatively large commitment of direct public expenditure covering a range of COFOG headings
- Many national, NDPB and local agencies are involved as providers and commissioners
- At face value, it has the potential to facilitate wider benefits beyond savings in expenditure – for example, increasing taxation revenues, or even the social benefits inherent in moving people into employment.

What is the problem and why is this a particular issue for London?

London’s economic activity rate is 75.8% compared to an England average of 79.5%, and its unemployment rate is 8.9% compared to 7.9% for England. The economically active gap between London and the English average therefore represents 189,000 additional individuals who are not in work or who are looking for work in London. London’s unemployment gap – the difference between London’s unemployment rate and the English unemployment rate – equates to an additional 209,000 people out of work; roughly equivalent to the population of the London Borough of Merton. Even adjusting for the high proportion of students within London, this higher local level of unemployment in London may seem peculiar, given the strength of London’s economy relative to other areas of the UK. Available evidence suggests that the problem of worklessness in the capital is driven by:

- A higher prevalence of individuals at risk of worklessness relative to the UK average
- A claimant population who in many cases are claiming for longer than elsewhere in the UK
- The effects of migration and competition for jobs
- The nature of London’s labour market.

We expand upon each of these characteristics in more detail below.

Higher prevalence of individuals at greater risk of worklessness

There is widespread data highlighting the demographic trends behind worklessness in the UK, and a number of these highlight particular problems facing Londoners, 30% of whom face two or more key

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23 ONS London Labour Market Statistics, August 2009 barriers to work, against a UK average of 23%. Unemployment rates are higher amongst minority ethnic groups across the UK as a whole, and Black/Minority Ethnic unemployment levels in London are 41% compared to 38% for the rest of the UK (ONS, 2009). Patterns of worklessness are also closely correlated with measures of poverty and exclusion, where London has a disproportionate share compared to the English average. Almost 17% of London’s homes are local authority-owned, compared to 13.1% in England and nearly half of all households living in social rented accommodation were workless (47%) compared with 21% for households living in privately rented property, and 8 per cent for those living in owner-occupied accommodation.

**Longer term claimants with poorer employment prospects**

Around 3,000 Londoners have been claiming an unemployment benefit for more than six months, which is broadly in line with the England average, but the number claiming benefits for more than a year is greater in London than the national average. A total of 6.1% of those of working age claim Incapacity Benefit (IB), below the national average of 7.3%, but 55% of London’s claimants have inadequate National Insurance contributions to claim contributory IB compared to 34% outside London, suggesting a worse work history in the capital (HMT, 2007). London IB claimants have poorer employment prospects than elsewhere with only 35% of those moving off IB finding employment of over 16hrs a week compared to 63% nationally (ibid).

**Migration, competition and London’s labour market**

Although the number of jobs in London increased by 700,000 in the decade between 1997 and 2007, the overall employment rate remained largely unchanged due to increases in the working age population over the same period. Domestic and international migration brings a constant stream of new workers into the city and increases competition, compounded by the fact that the demand pattern within London’s labour market has changed significantly in recent decades. Between 1981 and 2001 low skilled jobs fell as a proportion of London jobs from 12% to 10% (HMT, 2007).

On the supply side, London has an unbalanced skills structure which ‘sags’ in the middle, with more NVQ4+ individuals, but with fewer NVQ1-3/trade apprenticeships than the England average. There is a higher proportion of skilled labour seeking employment than elsewhere in England, which can exclude those with fewer qualifications and less experience.

**Building up the wider costs of worklessness in London**

An assessment of the total costs associated with worklessness is dependent upon the scope of benefits, credits, employment support and associated administrative costs that are included in any calculation. Based on our analysis, we estimate the figure for London to be at least £5bn per year, representing around 7% of the total spent on public services in the capital.

Expenditure on worklessness can be allocated between ‘direct’ and ‘indirect’ costs. The direct costs are those unemployment benefit payments directly attributable to worklessness, including Income Support (‘IS’), Jobseekers’ Allowance (‘JSA’), and Incapacity Benefit (‘IB’, replaced by the introduction of the Employment Support Allowance in 2008).

The total expenditure within London on those working age benefits was £2.645bn in 2007/08 set out in the table below.

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24 Labour Force Survey, Spring 2005, quoted in HMT 2007 25 2001 Census from Neighbourhood Statistics 26 ONS, Labour Market Trends, November 2004 27 Employment opportunity for all: tackling worklessness in London – HMT 2007 The costs of administering these benefits are not easily available. While these costs are hard to apportion at a regional level, London has 14.3% of the total numbers of IS, IB and JSA customers, and apportionment of the administrative costs of JCP on the same basis would give a figure of £450mn.

Finally, this number is further increased by some £450mn spent on employment policy within London during the same period. Thus the benefit and administration costs combined of direct benefits are in excess of £3.5bn.

We believe that the resulting figure understates the total expenditure on worklessness in London, since it ignores those working age benefits for which the worklessness of the claimant is likely to have a major bearing on the claim. Specifically, workless people are typically eligible to claim housing benefit and council tax benefit, and for some, their worklessness is a key factor driving the claim. Total expenditure on these other working age benefits was £4.821bn in 2007/08.

Finally, housing benefit administration costs in London totalled £71.6mn in 2003/04, the last year for which figures could be obtained from public sources.

This adds up to a combined total direct and indirect spend of more than £8bn on benefits, administration and related services, as set out in the diagram below.

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28 DWP Statistical and Accounting Data 29 HMT PESA data 30 http://hansard.millbanksystems.com/written_answers/1996/feb/22/housing-benefit On the basis that not all of the benefit expenditure for housing benefit and council tax benefit can be apportioned to worklessness, we have assumed, conservatively in our view, that it is reasonable to apportion £5bn of these total costs to worklessness.

The current system and its flaws

The current customer journey

In examining the potential for reform to the current system for tackling worklessness, we have applied a process of “customer journey mapping” to better understand the experience of people who are workless. The diagram overleaf illustrates in broad terms some of the strengths (highlighted in green) and weaknesses (highlighted in red) of the customer journey through the existing welfare administration process.

Strengths are that the initial award of benefit is swift and relatively efficient. The award is made nationally and therefore consistently. The system is relatively joined up; for example, claimants only have to prove eligibility for JSA/ESA in order to receive housing benefit and council tax benefit support.

However, there are also a number of weaknesses in the current process. The initial weakness is that, except in cases of large scale redundancy, there is limited preventative support to help people at risk to avoid worklessness. Research suggests that earlier interventions are more successful in supporting people into work(^{31}), yet in the current system significant delays can occur before customers with more complex needs are identified and offered support.

Current approaches to welfare support

Available research also indicates that the different welfare programmes adopted in recent years demonstrate relatively poor performance in London. For example, Work Based Learning for Adults, as measured by the percentage of leavers going into work is much less successful across the board in London than nationally.(^{32}) The correlation between national performance by ethnic minority groups and London’s performance, suggests that it is London’s higher proportion of these groups which makes a key difference in London’s underperformance. The causality is not with ethnicity but that ethnicity further

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(^{31}) DWP Contracting support for the hard to help http://www.dwp.gov.uk/docs/wr-chapter-3.pdf

(^{32}) http://research.dwp.gov.uk/asd/asd1/wbla/jul2006/wbla_jul06_table1.pdf correlates with underpinning factors of unemployment such as skills levels, language capacity, networks and some social choices (for example, female employment outside the home).

There is, more generally, a paucity of data which could be used to analyse the return on investment of these programmes, which in itself is a negative feature of the status quo.

One available source document, DWP research report 525, highlights that the Pathways programme had been ‘rather limited’ in impact. For example, the additional impact of this programme on employment chances, when compared to a control group was an increase of only 7%. This is compared against an additional cost of around £300 per claim.33

Key themes in recent thinking on welfare reform

More generally, the failings of the current welfare system and what can be done about them have been the subject of much recent thinking by both Government and a range of other interested parties. Perhaps most prominently, a report by David Freud34 identified a number of weaknesses in the process for helping individuals into work. Freud highlighted that individuals with multiple characteristics of worklessness were not being sufficiently catered for by the existing ‘New Deal’ client group approach, and emphasised a more personalised approach where public, voluntary and private providers drove up standards through competition.

Recognising the challenge of personalisation, the introduction of the Flexible New Deal was announced in Jan 2008. Alongside this, programmes such as Pathways to Work have sought to support those on Incapacity Benefit into work. In December 2008, DWP published the White Paper Raising expectations and increasing support: reforming welfare for the future.35 This was billed as ‘a decisive step towards a personalised welfare state’. The Treasury has also noted that the challenge of worklessness needs greater input from the local dimension; a recent policy paper stated that ‘Local autonomy is important to allow the flexibility to address area-specific problems’.36

In summary, there is a strong case for considering new ways to tackle worklessness, and this is all the more pressing in London given the scale of the challenge facing the capital. We set out below our proposals for a radical Total Place proposition to reorganise the delivery of welfare support services to London’s most vulnerable job-seekers.

A proposed new system and why this is better

Outline design for a new delivery model in London

We propose a new delivery model anchored in the following design principles:

- **Citizen-centric** – creating a system that builds tailored welfare support around the circumstances of individuals and local labour markets in the capital;

- **Devolutionary where it matters** – devolving responsibilities and resources to individuals and to local government to support a more personalised approach;

- **Centralised where it makes sense** – JCP retains an important role in processing and standard-setting to ensure consistency, fairness and efficiency;

- **Incentives and sanctions to support an early return to work are built into the system** - and aligned to individual and organisational accountability; and

- **The provision of employment advice should be further professionalised and locally organised** - by passing responsibility for performance management of these roles to local government and re-emphasising a case management approach.

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33 http://research.dwp.gov.uk/asd/asd5/rports2007-2008/rep525.pdf 34 http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/freud-report/ 35 http://www.dwp.gov.uk/docs/fullversion.pdf 36 HM Treasury, Employment opportunity for all – tackling worklessness in London March 2007 Our suggested approach proposes a seismic shift in central and local roles and responsibilities for worklessness in London, alongside a ‘staged’ approach to supporting workless people into work. The diagram provides an overview of this proposition, whilst the following sections set out how this might work in practice.

In this model, the individual continues to be given an initial assessment and award of benefit through the existing Jobcentre Plus initial award process. An initial assessment of their support need is made in relation to a number of criteria, including:

- The individual’s work history and the extent to which they have maintained a steady track record of previous employment
- The individual’s current skills levels and any aspirations they have for further training
- Their own view of their confidence and capability to find work in the future

From the assessment individuals would be grouped into those likely to require limited personal support to find a job, and those who will require more hands-on, personalised support. In the model we propose, the former continue to be managed by JCP.

The latter would be referred to a personal advisor, employed and managed (whether directly or through commissioning) by the local authority. They are responsible for helping the individual decide how best to use their own ‘personal budget’ – the pot of allocated expenditure which traditionally would have been partially devolved to them directly, and partially spent on their behalf.

Local government would be responsible for supporting the development of a provider market, from which the individual is encouraged to commission welfare and related support services. This could enable more personalised, individually relevant support which can be better linked to an individual’s needs – for example, childcare and rehabilitation. The underpinning rationale is that the local authority is well-placed to help individuals with complex needs both navigate through the myriad agencies that could help them, and advise on how they can best use the resources locally set aside for their use – including health and social care budgets for some individuals. JCP would maintain responsibility for the bulk of individuals who are well-placed to find work relatively easily with limited support. JCP would also take on a role as standard setter and enforcer, including applying sanctions to individuals not using the opportunity of personalised budgets appropriately.

The model recognises the local authority’s unique strengths, in having reach on the ground to other public, private and voluntary bodies and the holistic responsibility for an area which enables it to act as the convenor of services around an individual. It follows the hypothesis that support for well being and support into employment are complementary, rather than distinct, activities. It also reflects a wider range of learning and skills support outside of the traditional, course-led offer which could be better utilised. For example, work experience, job shadowing and peer support. For London in particular, it could provide a more holistic approach to supporting individuals with multiple and complex needs.

The diagram below illustrates the range of these services across the key dimensions of health and well being, skills and experience, and finding and staying in work.

**Key roles and responsibilities in the new framework**

**Workless individuals**

Workless individuals have a new responsibility for their own personal budget, to be used to purchase welfare and other support services to suit their needs. The right to resources comes with a responsibility to deliver an ‘into work plan’ agreed with their advisor, with a ‘ladder of sanctions’ approach; meaning they progressively sacrifice resource control if they fail to meet their commitments.

**Local government**

Local government acts as the strategic commissioner and market manager for the area, taking advantage of local knowledge of the labour market. It also acts as the convenor of a range of local services and galvanise public, private and voluntary sector interventions towards preventing and reducing worklessness, such as using local area agreements and similar mechanisms.

**Jobcentre Plus**

Jobcentre Plus continues to provide the initial assessment and payment function to all claimants – efficiently and consistently – on a national basis. JCP is able to share evidence about ‘what works’ in welfare interventions to support local authority market management activity and become a knowledge broker, rather than delivery vehicle for these services. It sets ‘kite mark’ standards for welfare providers. and the personal advisor role to support minimum quality standards; the role here would be akin to establishing a set of ‘professional standards’ to which providers and personal advisors should adhere, based on JCP’s existing experience and understanding of what is most effective in the delivery of welfare services and welfare advisory support.

There is also potential for JCP to act as an ombudsman in the event that local providers fail to meet their obligations – providing a ‘voice’ option in addition to the market effect of individuals voting with their feet.

Managing the risks associated with personal budgets

The potential advantages of personalised budgets have been demonstrated in the course of their increasing adoption within health and social care. Nonetheless, personal budget approaches carry risks that individuals make more or less effective decisions about resource allocation. One way to manage this would be to build risk mitigation into the new framework, and the following are set out below as illustrations of potential approaches that could be taken:

Potential approach: ‘Ladder of sanctions’

Currently, housing and council tax benefits are generally paid on the individual’s behalf, directly to their landlord (which in many cases is a social landlord). The Employee Support Allowance or JSA is paid directly by DWP, to the individual claimant. Any further support – for example, the costs of courses and personal care in the case of individuals with conditions – is spent on the individual’s behalf by various agencies, including Jobcentre Plus, local authorities and the NHS.

We acknowledge that personalisation of some of these benefits is controversial, but in the new model, they are devolved into one ‘pot’ controlled by the individual, empowering them to make decisions on where it is spent. The personal advisor’s role is help them navigate the market, and agree an ‘into work plan’ which will set out different conditions the individual has to meet to continue to have ownership of their funds. Failure to meet these conditions – for example, not attending interviews – would result in the activation of a sliding-scale of control being taken back by the local authority.

Naturally, the proposed model has significant implications for financial control and governance of resources. There are a number of ways this could be managed, which would need to be subject to detailed analysis as part of further development of the model. These could include:

- Retaining responsibility for each element of the ‘pot’ within the individual agencies who devolve the funding;
- Appointing a ‘lead agency’ to take overall responsibility and ownership of the resources on behalf of the key organisations involved; and/or
- Creating a bespoke, arms-length entity with specific responsibilities for the governance of the funding involved, as a way of managing the risks associated with this kind of devolutionary approach.

**A localised approach to commissioning additional employment support**

The Government has recognised the need for more direct forms of labour market support for certain groups of individuals, most recently in its Pre-Budget Report announcement of guaranteed work or training for 18-24 year-olds who are unemployed for more than six months.

We propose that this proposal could be expanded to support wider groups of workless individuals back into work, potentially through investment in local social enterprise drawing on a blend of public and third sector expertise. Given their existing economic development responsibilities, local authorities are well-placed to use local partnerships to establish such social enterprises, aimed at raising skills and experience among target groups and building social capital in deprived areas. This option might be considered for those individuals for whom individual support interventions have proved ineffective or where the most appropriate skills and experience support that could be given would be experience of a working environment.

We recognise that this has the potential to become a ‘crowded space’ given an existing and vibrant social enterprise market in some areas; we suggest that this type of intervention be focused on those areas where local authorities can use their local leadership role to stimulate support of this nature where it is less well-developed. The return on investment would be through reduced benefit costs as well as the local value generated by the enterprise. Jobs created in this way could be fixed term and aligned directly with local labour market needs, to ensure the flow of individuals back into the private economy.

**The potential financial implications of the proposed model**

Identifying the potential financial implications of this proposed approach is challenging, given the complexities in articulating the full costs of the current system. However, it is possible to develop some outline estimates of the potential savings available, by making a number of assumptions based on the available evidence about the effectiveness of existing programmes that have focused on greater personalisation of welfare support. We summarise below both the results of our analysis and a summary of our approach to undertaking it.

Our approach has been to focus on the potential savings in direct and indirect benefits expenditure that would result from getting more people back into work more quickly than the current system, since these represent the lion’s share of the £5bn costs of worklessness we identified earlier. We have also undertaken a high-level assessment of the potential additional ‘tax take’ on the earnings of those people moved back into work, which would otherwise be lost to the Exchequer.

**Our initial estimates suggest a potential for savings of almost £630mn** on benefits costs. The savings assumptions are set out in the table below.

| Savings area | Savings assumptions (maximised) (£mn) | |-----------------------|---------------------------------------| | Reductions in JSA payments | 60.7 | | Reductions in IS payments | 148.1 | | Reductions in IB payments | 52.3 | As soon as workless individuals are back in work, wider benefits accrue. For example, we estimate that the increased ‘tax take’ from getting Londoners back into work could be around £440mn, taking the wider picture of savings and benefits combined to more than £1bn.

Our savings assessment is underpinned by many assumptions. The key ones include that:

- The proposed model succeeds in closing the gap in unemployment levels between London and the UK average for the entire ‘excess unemployed’ population
- The ‘excess unemployed’ reduce the average time they spend claiming JSA by 35%
- The savings generated in reduced IS, IB and HB payments are half of those generated by reductions in JSA payments (reflecting the fact that IS/IB claimants have been historically harder to move back into employment than those claiming JSA, and that there will be a commensurate saving in HB linked to claimants returning to work)
- An additional ‘tax take’ is generated by 50% of the excess unemployed entering the workforce, based on an assumed average salary of £22,861 (equivalent to the bottom quartile for London as a whole); and
- The administrative costs of the proposed model are broadly equivalent to the existing system and therefore cost-neutral.

**Conclusion**

Clearly, some of these assumptions are optimistic and further financial analysis will be required in order to better develop a more robust assessment of the costs and benefits of the approach we propose. Nonetheless, the scale of the challenge facing London in relation to worklessness, and the potential financial and other benefits of an improved approach to tackling this challenge, suggest an urgent need to consider radical alternatives to the current system.

We advocate more detailed work to develop a model for testing, based on the principles and outline design that we have set out here, which puts workless individuals at the centre of a more personalised approach to welfare support, supported by local authorities as the agencies best-placed to co-ordinate the support services required to help people back into sustainable employment.

Our headline conclusions at this stage are that reforms along the lines that we have proposed could result in savings of almost £630mn of the current £5bn spent annually on addressing worklessness in London. In addition, there are the broader benefits of a further £440mn from increased tax revenues as a result of getting Londoners back into work. Overarching analysis and making the case for change

Introduction

The deeper analysis around the three themes was not undertaken solely to look at how services could be improved and/or costs reduced in these areas; an equally important aim was to identify opportunities for savings, service change or organisational realignment that could have application across public services and public spending more generally in London.

The three areas that we have examined in detail account for an estimated £10.65bn of expenditure: that is, almost 14.5% of total annual public expenditure in the capital. We have not even reviewed the totality of the systems of provision in each of these, yet our analysis already suggests that there is the potential for efficiency gains to be secured in the region of 15% of current expenditure across the three themes as summarised in the table below:

| Theme | Current estimated cost £mn | Potential saving £mn | Savings as a percentage of current costs | |------------------------|----------------------------|----------------------|------------------------------------------| | Chronic care | 5,000 | 880 | 17.6 | | Young people with ASB | 650 | 65 | 10.0 | | Worklessness | 5,000 | 629 | 12.5 | | Total | 10,650 | 1,574 | 14.8 |

The potential for improvement and efficiency is based on addressing a number of flaws that characterise current arrangements for delivering public services and outlining solutions to address them. There is a high degree of overlap in the analysis of the problems and generation of solutions between the three service areas we have explored. But more importantly, we believe that both the flaws and potential remedies identified are applicable more generally to public services across London, and therefore that the total potential financial and service improvement prize is considerably greater than that outlined in the above table. This range of reforms with more general applicability is summarised below.

Policy realignment around earlier intervention

The analysis of all three topics suggests that a significant weakness in existing arrangements is that insufficient attention is given to early interventions that avoid greater and more expensive problems occurring later. The consequence of this is less effective, and more costly, reactive responses by London’s public services.

The current arrangements for the management of diabetes illustrate this clearly. Despite steps in the right direction, resources to care for those with the more severe effects of diabetes remain disproportionately focused on the provision of episodic care within acute settings. The development of a more preventative approach, alongside other changes, has the potential to deliver more effective forms of treatment that are better aligned with the wishes of most people with diabetes and secure significant efficiency gains. This principle extends more widely across public services in London, for example, from health to criminal justice, from worklessness to homelessness. In particular, we believe that a greater focus on earlier intervention and prevention is at the core of helping to address the particular demands placed on local public services by what are frequently termed “the most chaotic families”.

Realising the full potential of the benefits from early intervention presents a significant challenge to the way public sector organisations are currently configured – our example of diabetes and also our recommendations concerning ASB both highlight the need for a considerable shift in resource to enable investment in preventative and early intervention measures.

There is an important leadership role for local government in London to play in pursuing this case for change, if only because London Boroughs stand to benefit disproportionately from the changes that we are advocating. In our example of the benefits of early intervention and prevention concerning the systems for treating diabetes, the gains to local government (£82m per annum) are potentially in the region of 23% of current expenditure compared to benefits of approximately 10% to the NHS (£22m) against current levels of spend.

This raises a broader and substantive challenge to public services and to Whitehall in terms of the design and delivery of efficiency programmes. The scale of the fiscal crisis facing public services is likely to engender another period of scrutiny of expenditure and now gives an opportunity – even an imperative – to put in place the necessary policy realignment across existing organisational boundaries to effect radical change based upon principles of early intervention and prevention.

Previous efficiency programmes driven from Whitehall, for example Gershon, have largely tended to reflect organisational boundaries both within central government and at the more local level. By taking a whole systems approach to complex challenges, our analysis suggests that the next wave of projects that secure substantial efficiencies within local government will in part be dependent upon reform within other parts of the public sector. Without that commitment to change, local authorities will increasingly find it difficult to secure their share of the efficiency gain in their position at the end of the “supply chain”.

Overall, our analysis indicates that, when planned correctly, almost everyone can benefit in a system built on earlier and more effective intervention.

**Self direction/self service by customers and citizens**

Our analysis suggests that another key and common strand of the reform that underpins greater efficiency is more self-direction or self-service by customers. This is not a new theme - “personalisation” has been at the heart of changes in the social care system for some time now but applicability beyond that is still relatively limited. In a separate study that we undertook in 2008, we estimated that the amount of current expenditure that met one of the four “personalisation criteria” of individual control; individual influence; community control; and community influence; amounted to only about 6% of that local authority’s budget. However, there was the potential for greater personalisation of services to apply in up to 50% of the local budget, so there is much more to play for here.

The revised models for service delivery that are explored in this paper are built upon a premise of greater self direction by the citizen/customer. Not only is this compatible with ideas of greater choice in public services; it is also consistent with the view that giving power to patients/customers/citizens to have a hand in shaping the services delivered to them is a social good in its own right. Critically, this move does not have to cost more. Indeed, we argue that it will cost less in most cases providing that the public sector agencies work hard to cut back that element of service provision that was built around the older service model. Our models are predicated on efficiency gains being secured for example through the transfer of funds to individuals in the form of a personal budget to assist them in seeking and securing work.

Self direction/self service is a theme that resonates across much of the public service beyond the three areas that we have examined. It has a role to play in education, cultural provision, housing and some elements of the criminal justice system. The range of potential areas for further investigation and analysis is significant – as a relatively small example, the option to give parents the budgets to spend on gifted and talented children as opposed to supporting provision through schools. The extension of personalisation to secure these financial and other benefits again requires significant policy realignment across public services, including within Whitehall. Again, we believe that local government has a clear leadership role to play here drawing upon its experience to date of extending personalisation in the area of social care.

**The importance of effective case management**

Our analysis has shown that, in some areas, current arrangements for service delivery are overly complex because of the involvement of multiple public sector bodies with occasionally overlapping roles and functions; sometimes contradictory objectives and targets; and at times inappropriate arrangements for the tasks in hand. We have resisted the obvious temptation to suggest a reduction the number of agencies involved in an overly-simplistic redrawing of roles and responsibilities as this often tends to recreate problems elsewhere within the system. Instead, we have identified three types of reform that help to underpin our analysis of the potential for savings within the three areas that we have studied but that also, we believe, have wider applicability across public service provision in London.

In our analysis of the whole system approach to young people who behave anti-socially, we highlight the complexity of the existing service delivery landscape. It has multiple agencies responsible for a variety of fragmented interventions designed to ‘nip’ anti-social behaviour and low-level criminal activity ‘in the bud’, and limited co-ordination of the sanctions and support for individual offenders and their families. We articulate a new approach to the management of anti-social behaviour amongst young people that places at its centre an integrated case management approach led by Youth Offending Teams under the control of local authorities. This development of a case management approach is the first of the three areas of reform that we have identified.

By case management, we mean more flexible, end-to-end management and organisation of the public service support that an individual needs, overseen by a key worker, case officer or similar. While this approach has been rolled out across a number of individual services, with mixed success, there have been fewer attempts to develop a single case worker role to co-ordinate and shape the delivery of multiple public services around the needs of individuals or even households. This is an important theme for the future: earlier intervention requires more intelligent predictive strategies to avoid later costs. Self direction/self service necessitates rounded and appropriate help for individuals or households seeking to navigate their way around the system. And more integrated approaches to service delivery by multiple public sector agencies require someone to act as the integrator.

All these needs point towards a better system of case management for individual citizens, especially around key transition events in their lives. This need becomes even sharper in the case of households who have multiple needs and who access services from many organisations. There has been considerable focus recently on the part of a number of local authorities, including some London Boroughs, on the needs and demands of high service users – such as the “top 100 families” in an area. These examinations have highlighted the very considerable requirements that relatively small numbers of households place on public services through their complex needs and frequent interactions with multiple providers. Our advocacy of effective and integrated case management should be an integral part of emergent local strategies both to deliver more effective solutions to these individuals and families and to secure substantial efficiency gains for the public purse.

We do not underestimate the scale of the challenge presented by this reform. The sorts of changes outlined above, and the more detailed propositions set out in relation to each of the key topics for this study, will require a new breed of public service professional to deliver them. Historically – and for sound reasons – public service professionals have been anchored in specific institutions and professional disciplines – and accountable upwards for performance to those same institutions. The service delivery models developed in our topic analyses suggest the need for more flexible public service workers, who are able to convene interventions by multiple public service organisations, engage proactively and early with individual citizens, and who are encouraged to feel more directly accountable outwards to the individuals they serve.

Once again, local authorities are ideally placed to take the lead here. Their existing construction as multi-purpose organisations with highly diverse workforces means that they have the broad outlook and role to take the lead in championing new models of public service workers. Organisational complexity and the delivery of local services that are place-appropriate

This paper highlights that the current systems for dealing with young people who behave anti-socially and for managing chronic conditions are both characterised by the involvement of a large number of public sector bodies (nine for ASB and eight for chronic care) and a lack of clear co-ordination between them. Indeed, on far too many occasions, the objectives and targets of one public body can clash with those of another – an oft cited example is the requirement for hospitals to hold patients longer than medically required as they await social care provision to be available in their homes and/or for move-on accommodation to become free.

These areas are not the exception. The multiplicity of organisations that provide services does not seem in general to have a strong logic: as we highlight in the earlier text, the relatively low spending field of “economy” has 60 spending organisations, whereas in education, with three times the spend there are only 21 spending bodies.

As we have noted above, we have resisted the temptation to call for a widespread dismantlement of existing public sector structures. There is a case to be made for that and it has been rehearsed by others. But widespread structural change can be expensive and disruptive, and is no guarantee in itself that services improve and that better outcomes are achieved. Notwithstanding that reservation, our analysis suggests that greater simplicity, with the added potential benefits of enhanced service delivery and better value for money can be delivered through some reallocation of responsibilities between public sector agencies within London. We further suggest that London Boroughs are ideally placed to assume these responsibilities.

For example, our analysis of current arrangements for tackling anti-social behaviour amongst young people emphasises the importance of an enhanced role for local authorities to ensure that Youth Offending Teams are deployed more effectively. We believe London Boroughs are best-placed to assume these greater responsibilities because they:

- Are the public sector bodies that are typically closest to their communities and with the best community knowledge
- Often incur significant additional costs at the end of the service delivery chain as a result of failed (or absent) interventions earlier in the system. In extending their role, there is a greater motivation for them to secure greater efficiency overall for the public purse.

In each case, our proposals therefore advocate greater authority for local councils who, we propose, should take responsibility for a greater proportion of the existing systems. Our analysis further suggests that the three areas we have examined in detail are unlikely to represent the sum total of the potential for efficiencies to be secured through the transfer of responsibilities to local authorities – witness our findings concerning the number of organisations associated with economic development. This in turn may call into question the viability of a number of agencies and bodies – as we say, this was not the starting point for our investigation but it is conceivable that a broader extension of this analysis across other areas of public expenditure in London will identify this as an appropriate course of action.

Organisational complexity and the gaps in provision

Our analysis has also identified that, in some cases, there are gaps in current public sector provision where appropriate intervention can secure better outcomes and greater efficiency. For example, at present there is insufficient attention given by public service providers to support young people in the transition to secondary education and to those youngsters who are excluded from formal education and who become associated with anti-social behaviour.

We have argued that London Boroughs are ideally placed to fill this current void for the range of reasons set out above. The extent to which this analysis and remedy can be repeated across other areas of public service provision is at present unclear, but it is reasonable to assume there are other areas of complex service delivery and/or community needs where “gaps” exist at present and consequently individuals’ problems are not addressed effectively and additional costs are incurred later by a range of public service organisations. Extrapolation of findings and potential savings

London Councils chose three important themes for us to explore in this paper – and within these, we have postulated savings that combine at more than £1.5bn each year. For the most part, these are the direct costs associated with those areas. We have identified still broader benefits in terms of enhanced tax revenues through effectively tackling worklessness and reduced future costs to society at large through earlier and more effective intervention in addressing anti-social behaviour.

We have highlighted the more general applicability of our reform principles to public expenditure at large within the capital. We therefore believe that the suggested savings of almost 15% that we believe would accrue in the three areas that we have reviewed, would apply equally to the total public expenditure in London of some £73.6bn per annum. In short, through general application of the reform principles we have set out above, we believe that the potential benefits accruing to the public purse in the capital could be as much as £11bn per annum.

Clearly further work is required to give greater certainty to this initial analysis and investment will be required to secure this level of savings, but our examination suggests there is a significant prize to be secured in delivering better services for Londoners at better value for money. Annex: Non-departmental public bodies operating in London

The list of bodies in the table below is based on Cabinet Office’s *Public Bodies 2008* publication. We selected those with a level of spend over £100,000 in that year and with a direct or significant indirect impact on London in that financial year. We have netted off income generated in normal operations (for example admission fees), in coming to a view about yearly operating costs.

| Departmental reporting/responsibility | COFOG category (PwC allocation) | |---------------------------------------|---------------------------------| | **Cabinet Office** | | | 1 Capacitybuilders | Economic affairs | | 2 Commission for the Compact | General public services | | 3 National School of Government | General public services | | **Communities and Local Government** | | | 5 Community Development Foundation | Economic affairs | | 6 English Partnerships | Housing and community amenities | | 7 Firelink | Public order and safety | | 8 Housing Corporation | Housing and community amenities | | 9 Home and Communities Agency | Housing and community amenities | | 10 Independent Housing Ombudsman Ltd | Social protection | | 11 LEASE (The Leasehold Advisory Service) | Social protection | | 12 London Thames Gateway Development Corporation | Social protection | | 13 Rent Service Executive Agency | Housing and community amenities | | 14 Standards Board for England | Social protection | | 15 Valuation Tribunal Service | Housing and community amenities | | **Department for Constitutional Affairs** | | | 16 Legal Services Commission | Social protection | | Departmental reporting/responsibility | COFOG category (PwC allocation) | |--------------------------------------|---------------------------------| | Department for Culture, Media and Sport | | | 17 Arts Council England | Recreation, culture and religion | | 18 Big Lottery Fund | Economic affairs | | 19 British Library | Recreation, culture and religion | | 20 British Museum | Recreation, culture and religion | | 21 Commission for Architecture and the Built Environment | Housing and community amenities | | 22 English Heritage | Recreation, culture and religion | | 23 Football Licensing Authority | Recreation, culture and religion | | 24 Gambling Commission | Economic affairs | | 25 Geffrye Museum (London) | Recreation, culture and religion | | 26 Horniman Public Museum and Public Park Trust | Recreation, culture and religion | | 27 Horserace Betting Levy Board | Economic affairs | | 28 Imperial War Museum | Recreation, culture and religion | | 29 Museum of London | Recreation, culture and religion | | 30 Museum of Science and Industry | Recreation, culture and religion | | 31 Museums, Libraries and Archives Council | Recreation, culture and religion | | 32 National Gallery | Recreation, culture and religion | | 33 National Heritage Memorial Fund | Recreation, culture and religion | | 34 National Lottery Commission | Recreation, culture and religion | | 35 National Maritime Museum | Recreation, culture and religion | | 36 National Museum of Science and Industry | Recreation, culture and religion | | 37 National Portrait Gallery | Recreation, culture and religion | | 38 Natural History Museum | Recreation, culture and religion | | 39 Olympic Delivery Authority | Recreation, culture and religion | | 40 Olympic Lottery Distributor | Recreation, culture and religion | | 41 Public Lending Right | Recreation, culture and religion | | 42 Sir John Soane’s Museum | Recreation, culture and religion | | 43 Sport England | Recreation, culture and religion | | 44 Tate | Recreation, culture and religion | | 45 UK Film Council | Recreation, culture and religion | | 46 UK Sport | Recreation, culture and religion | | 47 Victoria and Albert Museum | Recreation, culture and religion | | 48 VisitBritain | Economic affairs | | 49 Wallace Collection | Recreation, culture and religion | | Departmental reporting/responsibility | COFOG category (PwC allocation) | |--------------------------------------|---------------------------------| | **Department for Children, Schools and Families** | | | 50 11 Million | Education | | 51 British Educational Communications and Technology Agency | Education | | 52 Children and Family Court Advisory and Support Service | Education | | 53 National College for School Leadership | Education | | 54 Office of Her Majesty's Chief Inspector | Education | | 55 Partnership for Schools | Education | | 56 Qualifications and Curriculum Authority | Education | | 57 School Food Trust | Education | | 58 Teachers Training Agency | Education | | 59 Training and Development Agency for Schools | Education | | **Department for Environment, Food and Rural Affairs** | | | 60 Agricultural and Horticultural Development Board | Economic affairs | | 61 Agricultural Wages Board for England and Wales | Economic affairs | | 62 Agricultural Wages Committees for England | Economic affairs | | 63 British Potato Council | Economic affairs | | 64 Consumer Council for Water | Economic affairs | | 65 Environment Agency | Environmental protection | | 66 Food from Britain | Economic affairs | | 67 Gangmasters Licensing Authority | Economic affairs | | 68 Home Grown Cereals Authority | Economic affairs | | 69 Horticulture Development Council | Economic affairs | | 70 Joint Nature Conservation Committee | Economic affairs | | 72 Marine and Fishery Agency | Economic affairs | | 73 Milk Development Council | Economic affairs | | 74 National Forest Company | Environmental protection | | 75 Natural England | Environmental protection | | 76 Royal Botanic Gardens, Kew | Recreation, culture and religion | | 77 Sea Fish Industry Authority | Economic affairs | | 78 Foods Standard Agency | Economic affairs | | **Department for International Development** | | | 79 Commonwealth Scholarship Commission in the UK | Education | | Departmental reporting/responsibility | COFOG category (PwC allocation) | |--------------------------------------|---------------------------------| | **Department for Transport** | | | 80 British Transport Police Authority| Public order and safety | | 81 Highways Agency | Economic affairs | | 82 Rail Passengers Council | Economic affairs | | 83 Railway Heritage Committee | Economic affairs | | 84 Renewable Fuels Agency | Economic affairs | | 85 Trinity House Lighthouse Service | | | 86 Office of Rail Regulator | Economic affairs | | **Department for Work and Pensions** | | | 87 Health and Safety Commission | Economic affairs | | 88 Health and Safety Executive | Economic affairs | | 89 Jobcentre Plus | Economic affairs | | 90 Independent Living Funds | Social protection | | 91 Personal Accounts Delivery Authority| Social protection | | 92 The Pensions Advisory Service | Economic affairs | | 93 Pensions Agency | Economic affairs | | 94 The Pensions Regulator | Economic affairs | | 95 Working Ventures UK | Economic affairs | | **Department of Health** | | | 96 Alcohol Education and Research Council| Health | | 97 Appointments Commission | Health | | 98 Commission for Patient and Public Involvement in Health | Health | | 99 Commission for Social Care Inspection | Health | | 100 General Social Care Council | Health | | 101 Health Protection Agency | Health | | 102 Healthcare Commission (Commission for Healthcare Audit and Inspection) | Health | | 103 Human Fertilisation and Embryology Authority | Health | | 104 Human Tissue Authority | Health | | 105 Monitor – Independent Regulator of NHS Foundation Trusts | Health | | 106 National Biological Standards Board | Health | | **Department for Business, Enterprise and Regulatory Reform** | | | 107 Advisory, Conciliation and Arbitration Service | Economic affairs | | 108 Competition Commission | Economic affairs | | 109 Competition Service | Economic affairs | | 110 Consumer Council for Postal Services (Postwatch) | Economic affairs | | 111 Gas and Electricity Consumer Council (Energy Watch) | Economic affairs | | Departmental reporting/responsibility | COFOG category (PwC allocation) | |--------------------------------------|---------------------------------| | 112 Hearing Aid Council | Health | | 113 Local Better Regulation Office | Economic affairs | | 114 National Consumer Council x 3 | Economic affairs | | 115 Natural Environment Research Council | Environmental protection | | 116 SITPRO Ltd | Economic affairs | | 118 UK Atomic Energy Authority | Economic affairs |

**Department for Innovation, Universities and Skills**

| Departmental reporting/responsibility | COFOG category (PwC allocation) | |--------------------------------------|---------------------------------| | 118 Arts and Humanities Research Council | Education | | 119 Biotechnology and Biological Sciences Research Council | Economic affairs | | 120 British Hallmarking Council | Economic affairs | | 121 Construction Industry Training Board | Economic affairs | | 122 Design Council | Economic affairs | | 123 Economic and Social Research Council | Education | | 124 Engineering and Physical Sciences Research Council | Economic affairs | | 125 Engineering Construction Industry Training Board | Economic affairs | | 126 Higher Education Funding Council for England | Education | | 127 Investors in People UK | Economic affairs | | 128 Learning and Skills Council | Education | | 129 Medical Research Council | Health | | 130 National Endowment for Science Technology and the Arts | Economic affairs | | 131 Office for Fair Access | Education | | 132 Quality Improvement Agency | Education | | 133 Science and Technology Facilities Council | Education | | 134 Sector Skills Development Agency | Education | | 135 Student Loans Company | Education | | 136 Technology Strategy Board | Economic affairs | | 137 UK CES | Social protection |

**Foreign and Commonwealth Office**

| Departmental reporting/responsibility | COFOG category (PwC allocation) | |--------------------------------------|---------------------------------| | 138 British Council | General public services | | 139 Great Britain – China Centre | General public services | | 140 Marshall Aid Commemoration Commission | Education | | 141 Westminster Foundation for Democracy | General public services |

**Government Equalities Office**

| Departmental reporting/responsibility | COFOG category (PwC allocation) | |--------------------------------------|---------------------------------| | 142 Equality and Human Rights Commission | General public services | | Departmental reporting/responsibility | COFOG category (PwC allocation) | |--------------------------------------|---------------------------------| | **Home Office** | | | 143 Independent Police Complaints Commission | Public order and safety | | 144 Independent Safeguarding Authority | Public order and safety | | 145 National Policing Improvement Agency | Public order and safety | | 146 Office of the Immigration Services Commissioner | Public order and safety | | 147 Security Industry Authority | Public order and safety | | 148 Serious Organised Crime Agency | Public order and safety | | **Ministry of Defence** | | | 149 National Army Museum | Recreation, culture and religion| | 150 Royal Air Force Museum | Recreation, culture and religion| | **Ministry of Justice** | | | 151 Criminal Cases Review Commission | Public order and safety | | 152 Criminal Injuries Compensation Authority | Public order and safety | | 153 Information Commissioner's Office | Public order and safety | | 154 Judicial Appointments Commission | Public order and safety | | 155 Parole Board | Public order and safety | | 156 Youth Justice Board for England and Wales | Public order and safety |